Friday, August 14, 2009

Philippine capitalism under Pres. Arroyo

Peter Wallace, an Australian businessman who has been living in the Philippines for more than 30 years now, wrote an article today in Manila Standard entitled "We don't want you", below. Peter is into business consulting, he deals with lots of multinationals doing business in the country. So his perspective is a good barometer of how foreign capitalists view the Philippine's business environment.

Here, he is saying that under the current administration of President Gloria Arroyo, Philippine capitalism is falling more and more into bureaucratic control. The telecomms, petroleum and pharmaceutical industries are clear examples. He wrote,

He also mentioned me and my position on drug price control (which will officially start tomorrow) in this article.

And looking at the current breed of major candidates from big political parties for the Presidential elections just 9 months from now, I think no one is in the mood to assert a more free market capitalism. Not even the candidate from the Liberal Party, supposedly the party that should advance liberal politics and liberal economic agenda. Liberal in its classical definition, not the US definition. Even the aspiring politicians from small political parties and political formations who also aspire to become President, almost everyone seems to be statist and socialist, hiding as nationalist.

That's the peril of people advancing the free market and competitive capitalism. You are set for big disappointments. Unless you have a big and determined heart to pursue the advocacy. It is also very important to have an international network of fellow free marketers because it is very rare to find guys with similar belief with us in our respective countries.

Below is Peter's article.

We don't want you

Wouldn't you think that with somewhere around 45 million people without a half-way decent life and some 6.4 million of them without a half-way decent job, or for another 4.1 million of them without a job at all, plus eight or nine million who?ve fled because they couldn?t get a job here, that the leaders of this country might, just might care? And want to fix the situation by encouraging businessmen to invest and build businesses that would properly employ desperate people?

But no, that?s not what the government is doing. I don?t think I?ve seen a more threatening, less enticing business environment since the crony days of Marcos. In my talks with foreign businessmen, the mood is somber, concerned, disappointed.

The principal problem I see is what I?d call ?surface thinking??seeing something that looks good without thinking through the inevitable repercussions, ramifications of a simplistic decision.

Nonoy Oplas of the Minimal Government Thinkers Inc., had a good point as to ramifications. The Filipino drug companies used to do quite well against the multinationals because they could under cut their prices. Now the multinationals have been forced to sell at costs that could put the local companies out of business.

Do you think a board of directors in New York, London or Paris is going to approve further investment in a country that whimsically (the correct word) forces (also the correct word) companies to halve their prices because it?s a popular decision? The chief executive officer of Pfizer, Jeffrey B. Kindler, already made that publicly clear: they won?t.

Everyone is delighted that drugs are now cheaper but, and here's the key, there were better, much more acceptable ways to do it that wouldn?t have alienated the very people you want to come in and provide jobs for those 18 or 19 million who?d like one. And a well-paying job in decent surroundings, I might add. It?s well known multinational companies that pay well and look after their staff. The correct solution is to just open up the market more to generics that sell at a fraction of the cost, remove the taxes on essential drugs (if the government wants lower prices why should it be the one ADDING TO THEM) and provide free health services by the government to those who can?t afford it....

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